It’s “Helicopter Ben” to the rescue.

For people who follow the financial markets, last Tuesday’s announcement by the Federal Reserve was a watershed event that historians, pundits, and investors will talk about for years to come. The Fed essentially opened the floodgates to help the economy and signaled more help is on the way. Here are the key points from the Fed’s announcement.

• It established a new target range for the federal funds rate of 0 to ¼%-effectively it’s as low as it can go.

• It expects to keep the federal funds rate at an exceptionally low rate, “for some time.”

• It will use, “All available tools to promote the resumption of sustainable economic growth and to preserve price stability.”

• It is evaluating the benefits of purchasing longer-term Treasury securities as a way to lower long-term interest rates.

• Going forward, it will, “Support the functioning of financial markets and stimulate the economy through open market operations and other measures that sustain the size of the Federal Reserve’s balance sheet at a high level.”

Money manager Bill Fleckenstein summed it up nicely by saying, “The Fed went for it, corroborating the view that many of us have held for some time: that when push came to shove, the central bank would let nothing stand in the way of printing any amount of money, and monetizing anything required to fend off the ill effects of the collapsing bubble.”

Wall Street’s reaction to all this was mixed. On the day of the announcement, the Dow Jones Industrial Average soared 359 points. Over the next three days, though, it gave back most of those gains.

For homeowners, the Fed’s action was positive. Long-term interest dropped significantly after the announcement and that may translate into lower mortgage rates. If this causes the housing market to perk up, it may give the economy the jolt it needs to begin stabilizing.

You probably remember the old saying, “We’re from the government and we’re here to help.” No doubt about it, the Fed, the Treasury, the White House, and even Congress are now “here to help.” The question is, do they know what they’re doing?

As James Grant, editor of Grant’s Interest Rate Observer, so wryly pointed out in a recent Wall Street Journal essay, “Prescience is rare enough in the private sector. It is almost unheard of in Washington.” Despite this historical lack of foresight, we’re all putting faith in the government that they can correctly diagnose our current problems and prescribe the right dose of medicine to get the economy moving again. So far, the medicine may have moved us out of the emergency room, but we’re still in intensive care.

THE SPEED AT WHICH the economy and the financial markets have moved this year is astonishing. Here’s a brief look at some of the most amazing changes.

• The S&P 500 index dropped nearly 47% in just six months between May 20 and November 20, according to data from Yahoo! Finance. By contrast, during the severe 1973 - 1974 bear market, it took the S&P 500 more than one year and eight months to drop that amount (January 11, 1973 to September 27, 1974).

• Crude oil prices started the year at $95.98 a barrel and just over seven months later, it peaked at $145.29 per barrel on July 3-a 51% increase, according to data from MSN. This helped stoke fears of runaway inflation. But wait, crude prices then plunged 76% in less than six months between July 3 and December 19. Now the talk is about deflation. Vertigo, anyone?

• The yield on the 10-year Treasury bond dropped from 4.02% on October 14 to 2.07% on December 18, according to data from Yahoo! Finance. That’s a 48% decline and nearly two full percentage points in just over two months. By contrast, for the six years ending October 14, 2008, the yield on the 10-year bond changed by less than one quarter of one percent, according to Yahoo! Finance data.

• Nonfarm payroll employment rose by 94,000 in November 2007. Just a year later, in November 2008, nonfarm payroll employment fell by 533,000, according to the Department of Labor. And sadly, from December 2007-the start of this recession-to November 2008, the number of unemployed persons in the U.S. rose by 2.7 million.

• The auto industry, as we all know, is hurting. Parts supplier Johnson Controls issued an outlook on October 14 of this year and forecasted North American auto sales would reach 12.3 million units in 2009. Just two months later, on December 16, they revised their forecast downward to only 9.3 million units. Is it any surprise that two of the Big 3 auto manufacturers are on the brink of bankruptcy?

We’re not sharing this information to depress you. We’re simply pointing out that changes are happening with lightening speed. So far, many of these changes have been detrimental to people’s wealth. But, on the positive side, let’s keep in mind that if things turned this quickly on the downside, perhaps they could also turn that quickly on the upside. A return of confidence may be one key to making that happen.

WE WANT TO TAKE A MOMENT and comment on the Bernard Madoff scandal. As you probably know, Madoff allegedly engaged in a giant Ponzi scheme that bilked investors around the world out of $50 billion. In this industry and in human relation in general, trust is of utmost importance. When that trust is shattered, people are understandably enraged and dispirited. As it relates to Madoff, it’s doubly frustrating because we rely on government regulators, such as the Securities and Exchange Commission, to monitor money managers and brokerage firms and prevent this type of fraud. Clearly, the regulators failed us.

Madoff is the latest in a line of swindlers who put their own interests ahead of their clients. Yes, there are bad apples in the financial services industry just like there are bad apples in government or any other line of work. Yet we don’t want a small number of bad apples to deter investors from seeking investment counsel. We work extremely hard to earn your trust and we do all we can to ensure that your assets are invested wisely and housed with secure and trustworthy custodians. If you have any questions or concerns about this, please let us know.

Weekly Focus - Happy Holidays

As we wrap up one year and begin a new one, we wish you and your family peace, health and happiness. It’s our privilege to serve you and we look forward to working hard on your behalf in the years to come.